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The Successful Startup | Getting the right investors

Setting up a new business venture

Setting up a new business venture is never an easy task, more so if it’s your first time. Mistakes are bound to occur and a lot of details are overlooked. However as most business pros say, that’s just a part of the very long learning curve on the way to operating a successful business.

Based on the word of successful business persons and a lot of extensive research, this piece aims to give the budding entrepreneur a few things to look out for when trying to set up a business and choosing the best investors who can carry and share the dream you visualize for your start up.

Steps to finding the right investors

For many start-ups, finance is the foremost issue that sets back their plans. As such it is imperative that one looking to go into business needs to know how to raise capital by looking for proper investors.

Below we discuss a few details in brief on what to look out for when choosing an investor for your business:

Identify your requirements for the venture

This particular point can be looked at from various angles. In this case however, it pertains what you’re looking for in terms of the investor. What kind of input would you want him/her to have in your business? Will they be a vocal, a rather very much involved in the business kind of investor or the silent investor who just backs you by financing your operations? Such questions are very much at the top of the list when considering an investor. The global entrepreneur program based in the UK is a great resource towards expanding your knowledge on this matter as well.

Deciding what kind of investors you want for the business

This part is a bit straightforward. There are primarily 3 types of investors:

•    Angel investor
This kind of investor has a particularly keen interest in your budding enterprise and would for the most part, rather have a hands-on role in the business. The involvement would however be on a low scale.

•    Venture Capital Firm
These kinds of firms are very industry specific and as such are well specialized to helping you achieve your goal in the long term if your start-up happens to be in an industry within their sights. A major setback though for these kinds of investors is that they would claim a rather huge stake of your company’s shares or profits in the long run.

•    Private Equity
As the name implies, these are private individuals who invest in start-ups they deem worthy. In exchange for their investments they receive a stake of your company or stake of the profits generated.

Reputation

The reputation of an investor is a very important thing to look out for. You can dig out how well or poorly they work as investment partners through research on them. This critical step in evaluating a business investor ends up saving you a lot of trouble as you can identify and root out the greedy and controlling types before a contract is put down with them.

Expertise

This in brief is a look at how well acquainted the investor is with the field of business you’re looking to go into. A more familiarized investor may be able to better guide and help as you grow.


Don’t go into business with an investor who......

1. Has been known to have bad relationships with their partners for whatever reasons.

2. Does not do their agreed role in the partnership.

3. Has been tipped to be untrustworthy be it because of greed when it comes to profit splitting or in terms of not honoring contract agreements.

The above problems can be rooted out before actually going into a long term contractual agreement by doing trial runs. In the course of the trial run with an investor, you can determine how well you work together, if you’re on the same page as to where you’d like to drive the business and most importantly, if they overall have the desired characteristics of beneficial partnerships you’d want to have.

In conclusion

A lot of work goes into making a business work. It is imperative to look and research a lot of things that would make your business a success in the long run. Consider how to outsource business operations on the cheap so that you can concentrate on the really important matters without much hassle. All the best on your journey to success and in finding the right investor who is not only interested in profit but in seeing your dream become a reality!

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Cost Recovery has helped me to a very large extent by helping me create a realistic financial plan for my business. Prior to knowing about them, I was not very confident about taking the first step to start my own business!
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Musicland

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Robinson Furniture

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